In the last several weeks, we’ve seen a general resurgence of interest in private capital formation - which is a really encouraging sign, given the overall economic climate. The scuttlebutt is - and this has not demonstrated a long enough history to really be called a trend, but again, signs are encouraging -  that smaller boutiques, in particular small family offices,  seem to be eager to lock in the great values that a stressed capital market has created. Additionally, there seems to be a trend amongst individual HNW investors to look at funding companies within their subject matter expertise. Rather than plunging back into equities, HNW individuals as well as small family offices seem to be leading the charge into private fundings.

Big sigh of relief here. If private capital formation didn’t pick up, can you imagine where the economy would be a year or two from now?  At the risk of sounding overly naive, consider this:  folks who take on the risk of funding tomorrow’s companies are true heroes, in the most literal sense. They  take risks that have real, tangible, discernable effects on the lives of countless individuals. They create jobs. They create a tax base. They are the true drivers of the nation’s economic engine. All presidential speechifying aside, if those who engage in capital formation were to just sit aside and wait (like those yellow bellied greedy excuses for risk managers that we call Bankers - who, having recieved trillions in bailout bux are still to afraid to open the faucets even a little) if the botiques that make considered investments into private companies were just to sit back and do nothing, why then the entire economy would grind to a halt. So keep it up! The “green shoots” are nothing without you.

Sorry folks, for the last several days we had an intermittent server problem which selectively denied some members access to the site… Finally caught the problem out, and we are back 100%! To those who were affected, please accept our humblest apologies. And - please accept our thanks, too ; if it weren’t for your mention of the issue it might have gone unnoticed for some time.

We’d like to report an innovation which may be coming to your private capital risk management desk - and causing smiles - soon. At least one company has siezed on the “crisis of confidence” and created a new financial product that in all candor - may revolutionize the capital formation industry.

The innovation is a clever new twist on one of the oldest of financial products: Insurance. The product would work on a one-off basis in conjunction with proposed placements, fully collateralizing them and functioning as an insurance, rendering the subject projects near risk neutral. And it applies accross many industry categories and deal types/structres. It also nets out to be nearly cost neutral over the long term, without limiting the potential upside of the project. Almost sounds to good to be true, doesn’t it? Maybe so, but apparently, the product has received several patents, and has already been used in several completed offerings in the $30 Million range. So, the real question is, does this thing have the heat to thaw a frozen market? And how exactly does it work? (more…)

Federal authorities have been conducting stress tests of the top banks to assess their potential viability in a potential worsening economy scenario. The tests, which basically run the banks operations thru mathematical models, are designed to ferret out potential weakness, and to give a broad assessment of relative health.Results are not due until May 4. Apparently, however, the preliminary findings have been leaked, and the story has made it from the simple blog post of Hal Turner all the way to the Financial Times, CNN, etc.

The findings, if they are to be believed, indicate that fully 16 of the 19 banks tested are borderline insolvent right now, and will not withstand even a minor disruption of cash flow. And if even two of the sixteen currently near insolvent banks go under, all remaining FDIC funds will be wiped out.

Five of the 19 are allegedly so dangerously under capitalised that there is serious doubt that they will be abkle to continue operating as ongoing businesses.

And then, fully 1816 banks and thrifts representing 4.67 Trillion Dollars are at risk of failure too.

The study assumed an unemployment figure of some 9% Maximum. And it doesn’t require too much speculation to imagine far exceeding that figure.

So, is the report and the leaked figures real? And what does it mean in practical terms if it is?

If governmental reaction is any indicator, there is the CNN report. CNN ran with the report, and recieved an immediate call from the SEC demanding to see the report. CNN basically told them to go pound sand. They neither confirmed nor denied the veracity of the report.

The market reaction to the release of the rumored figures was poor to say the least. Assuming that the figures are correct and that the report is real, might one believe that any potential damage is priced in already?

This author doesn’t think so. As the scheduled report release date of May 4, is a Monday (traditionally a bad day to bring bad news) I wouldn’t be surprised if the actual information were held back a bit.

Making the week of May five - particularly the end of the week - a potentially wild ride.

From Bill Moyers Journal:

MUST WATCH!!!

The financial industry brought the economy to its knees, but how did they get away with it?  With the nation wondering how to hold the bankers accountable, Bill Moyers sits down with William K. Black, the former senior regulator who cracked down on banks during the savings and loan crisis of the 1980s. Black offers his analysis of what went wrong and his critique of the bailout.

http://www.pbs.org/moyers/journal/04032009/watch.html

It has been written that “Even This Shall Pass Away”;
That even the greatest monuments of stone shall crumble slowly in the sands of time.
So goodbye, Sovereignty, goodbye. Long live The Dollar as it Walks The Last Green Mile.  Dollar, as you slide, Hedgemony receding into memory, I Will Remember You, your backside Inscriptions “Novus Ordo Seclorum” And “Annuit Cœptis”, and the irony of those words, revealed, no longer a mystery.
The world will mourn your passing as a just and mighty warrior,
Into the fall.

There’s been a lot of talk in the media regarding the potential of a new global currency. Most of the talk has consisted of clips of people like congresswoman Bachman (R, Minnesota) telling us that we must do something now, and of the terrors of seeing the Dollar replaced as the world reserve currency, and financial/political pundits saying that these people are dangerous lunatics who ought to be put in jail for fear mongering or anti-government speech under the home grown terrorism act.

So- Who is right? If we go by what Tim Geithner says, we are left confused and abused. On one day, he tells the House Finance Comittee that there is no interest in  such a thing, and that the government will fight any suggestion to the contrary. And then the next day, before the CFR, Geithner stated that the US was very open to considering a global currency, and that it should be thought of as an evolution, rather than as a global takeover. Okay, so Geithner is nuts, had an overnight change of heart, or is dissembling. You be the judge- but in any event, Geithner offers no clarity on the subject.

But the G20 Meeting did offer some stunning clarity. A bit shocking, perhaps, since the popular expectation was that the G20 would accomplish nothing, whereas it did, in fact, accomplish quite a bit. (more…)

Good news for the State of Wyoming. Finally, a Sheriff with the balls to stand his ground sued several Federal agencies and won - setting a new precedent and holding a lantern to the recent States Rights movement.

Bighorn County Sheriff Mattis said that he is reacting “in response to the actions of federal employees who have attempted to deprive citizens of my county of their privacy, their liberty, and their property without regard to constitutional safeguards… Employees of the IRS and the EPA are no longer welcome in Bighorn County unless they intend to operate in conformance to constitutional law.”

The U.S. District Court decision (Case No. 2:96-cv-099-J (2006)) reads “The duly elected sheriff of a county is the highest law enforcement official within a county. He has law enforcement powers that exceed that of any other state or federal official.”

Upon the news, the Sheriff held a press conference and announced that all federal officials are forbidden to enter his county without his prior approval. He (and the Sherriff’s association) further demanded that federal agencies immediately cease the seizure of private property and the impoundment of private bank accounts without regard to due process in Wyoming state courts. (more…)

This author contends that the real issue in the global financial crisis is not the overweeningly huge debt level that the banksters have been happy to pass along to you, the taxpayer - that is bad enough, but not the worst of things.

The worst is the “Crisis In Confidence” that we are lately experiencing and that has taken root world wide. The inability to trust counterparties (let alone our elected officials) to do the right thing, or even to be held accountable in any meaningful sort of way…

The “Crisis In Confidence” will not only make it impossible to get past this debacle quickly, but it will stand in the way and thwart any potential progress along those lines. Indeed, it may become a de-stabilizing force unlike anything our country has dealt with since the civil war- or since Independence. (more…)